There’s no question that the social and economic impacts of the ongoing public health crisis are significant. Social distancing, government restrictions and remote working have limited travel and interaction with families, friends, services and coworkers. And, economically, while some enterprises have flourished, many businesses have closed or have had to change their business model to survive.
Resilience, while perhaps the most overused word throughout the past 14 months, certainly defines how many people and businesses have adapted in the face of challenges and hardships.
Now, with the rollout of the vaccination program underway, many people are anxiously awaiting the return to “normal”. One of the predominant questions facing us as we look to emerge from COVID-19 is: What will the economy look like and will prosperity return?
While it’s difficult to forecast exactly what the future looks like, we can get some direction by looking at the economy following the Flu of 1918 (also referred to as the Spanish Flu, which is a misnomer).
A look back at the Flu of 1918
The Flu of 1918, much like COVID-19, was a global pandemic. It spread around the globe from 1918 to 1920 and, while estimates vary, historians believe between 20 million and 100 million lives were lost. In addition to the staggering loss of life, the economic impact of the Flu of 1918 was compounded by geopolitical events and the demographics of those hardest hit by the virus.
The pandemic began just as World War I was ending and, as societies emerged from the war, governments reduced military spending, which impacted economic activity. Additionally, unlike COVID-19 to date, the flu disproportionately impacted young adults between the ages of 20 and 40. While the degree of economic impact varied greatly from country to country, the Flu of 1918 contributed to high unemployment and low GDP globally until the early 1920s.
As the flu abated, the 1920s experienced tremendous economic expansion. There were many contributing factors that helped lift the economy, but two are really noteworthy:
- First, transportation became democratized. Henry Ford began producing cars in the early 1900s and, over the next two decades, produced a product that was within reach for many Americans. However, it was not only the Model T that drove the economic expansion. New products and services grew across the country as roads and bridges were constructed, motels were built for weary travelers and mechanics developed skills to fix automobiles.
- The second achievement was electricity. Much like the automobile, electricity was in its infancy prior to the flu but, as countries emerged from the pandemic, homes gradually became electrified. Electricity was the catalyst for new industries that further accelerated economic expansion, enhanced employment opportunities and improved quality of life with things such as home refrigeration, washing machines and radio entertainment.
What innovations might drive the economy after COVID-19?
Gazing into a crystal ball to see what the economy might look like as we exit COVID-19 is difficult, if not impossible. Nonetheless, there were some interesting innovations prior to the beginning of this pandemic that can give us some insight into what we can expect in the years to come. Two of those innovations are cloud computing and 5G networks.
The continued transition to cloud computing
Years ago, cutting-edge technology for many small businesses included computer servers, often stored on site. These servers may have hosted a website, client data, accounts payable, accounts receivable and HR files. In recent years, many of the large technology companies—including Microsoft, Amazon, Google and Salesforce—have launched cloud computing services for businesses to replace systems and networks historically supported by servers.
By removing such hardware from the premises, many short- and long-term advantages can be realized:
- This technology has world-class encryption to protect sensitive data.
- Cloud service providers often support their clients on multiple platforms to eliminate downtime.
- Providers are continuously updating their technology platforms.
- There are often financial benefits with cloud computing as the platform reduces the need for on-site technical support and businesses can recapture physical space once necessary for a server room.
What are the impacts of 5G technology?
5G wireless technology has been under development for several years. While presently only available in select markets in Canada, 5G holds significant promise to transform communications and industries through the speed at which data is transferred. In addition to the speed, 5G will allow hardware manufacturers to change their devices to reflect the capabilities of the new technology. For example, because the data transmission speed over a 5G network can be 100 times faster than a 4G network, devices will consume less battery and potentially less computing power.
While the implications of cloud computing and 5G may transform medium- and large-sized businesses, the technology may also change how and who we work with in the future. With these technologies, employees may no longer need to travel to the office, as all of their services and accesses would be within reach from their home office. Prospective employees who once aspired to work for a firm but didn’t want to move to a new city may no longer need to relocate to join the team. The gig economy could flourish as people with unique skills, tech and talents are able to access new clients and markets, all while working from home.
Cloud computing and 5G may also transform where we choose to live. Potentially no longer tethered to a neighbourhood near their place of work, employees and business owners may move to other communities or locations in the pursuit of their desired work/life balance. When such moves occur, the potential for economic expansion inevitably follows, with communities delivering products and services to the new residents that will enrich their lives. Infracture development for these communities will require engineers and other professionals to plan for the future. Trades will build the necessary infrastructure and support local business. As more services are introduced to the community, new entrepreneurs will enter the marketplace or expand their existing business, resulting in the hiring of new employees.
Similar to the economic expansion that was fueled with the Model T, cloud computing and 5G technologies can not only reimagine business, but be a catalyst to growth across all sectors of the economy.
Much like the recovery in the years following the Flu of 1918, we can expect economic resiliency as we emerge from COVID-19. New products and services, previously not needed or conceived, will be enabled by tools that were in their infancy prior to the pandemic. And other innovations will surely follow in the post-vaccine world, including broader health care successes resulting from the mRNA vaccine technology.
While there is still work and uncertainty ahead, history demonstrates that people and the economy are indeed resilient and capable of weathering the storm.
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